Activision Blizzard announced better than expected results for the quarter ending 30 September 2013, with non-GAAP net revenues of $657m outperforming Activision's outlook of $585m, and 8c/share non-GAAP eps against a projected 3c/share.

GAAP net revenues were $691m, down $150m on the prior year Q3, and GAAP EPS was 5c/share.

Bobby Kotick, CEO of Activision Blizzard, said in the earnings release:

Our third-quarter results exceeded our expectations, and we are able to raise our outlook for 2013 net revenues and earnings per share. Robust continued engagement with our core franchises drove digital revenue, which constituted a majority of all revenue. This quarter demonstrates that games like Call of Duty and World of Warcraft engage and entertain our fans year round.

Activision Blizzard have experience sales success from both their Activision Publishing and Blizzard Entertainment subsidiaries: in the year to date, Activision's Skylanders Giants and Call of Duty: Black Ops 2 have taken two of the top five posts in the lost of best-selling games. Skylanders Giants was the best-selling child-targeted console game by dollar value for the three months of Q3 and the nine months of the year to date.

Blizzard's World of Warcraft remained the top-grossing subscription-based MMO, with 7.6 million subscribers, and Starcraft 2: Heart of the Swarm was the #1 PC game of the year to date.

Significantly, 61% of these revenues on a non-GAAP basis came from digital revenues, including not only digital sales but also subscription fees for World of Warcraft and premium features of the Call of Duty: Elite online matchmaking service.

The outlook for the full year was lifted slightly by these results: non-GAAP revenues for the vital fourth quarter, which saw the release in October of Skylanders Swap Force and this week the latest entrant in the top-selling Call of Duty franchise, are now projected to be $4,285m, up $35m, with full year earnings per share estimated at 89c/share. However, non-GAAP revenues for Q4 are projected to be down slightly, at $2,215m, from a prior outlook of $2,252, with earnings per share reduced to 72c/share, in part due to the increase of diluted shares from 743m to 785m.

Bobby Kotick sounded a cautious note regarding Q4 performance, while arguing for the benefits of the buyout of Activision Blizzard from
Vivendi, which completed this quarter on October 11:

[W]e continue to believe that the fourth quarter this year presents a unique and challenging landscape due to increased competition and uncertainties surrounding the console transition. We are confident in our ability to navigate these challenges successfully, particularly in light of the recent completion of our transaction with Vivendi and the focus and flexibility provided by our return to independence.

I am currently a Contributing Editor at Wired Magazine in the UK, having written for Wired UK since its launch in 2009, and speak regularly on the impact of developing technologies on consumer behaviors at Wired Consulting events and elsewhere.